Let’s face it, homeowners’ associations are a fertile ground for thieves and people who exploit the trust given to them. After all, depending on the size of a community, thousands and thousands of dollars are sent from homeowners to the association to cover costs.
Associations must take the time to ensure their financial safeguards are in place to try and prevent fraud.
One aspect of financial safeguards is now required by law. In this legislative session, a new law now makes it illegal to use debit cards for homeowners’ association purchases. While most directors and association managers would not think about using a debit card for fraudulent purchases, a few bad players have taken that ability away.
Take this case in Leesburg featured by the Florida Association of Community Associations. There, a board member was accused of stealing $3,000 in association expenses. He claimed his wallet was stolen, but video evidence proved otherwise.
And last year, an association manager in Alabama was charged with stealing $40,000 from the association.
Those are only two of many examples of this type of abuse.
The attorneys at The Orlando Law Group represent more than 100 communities in Central Florida. If you live in Orlando, Winter Garden, Altamonte Springs, Kissimmee or anywhere throughout Central Florida, The Orlando Law Group is ready to help you.
What Does the New Law Specifically Say?
Often times in the legal world, there are ways to interpret statutes differently. It is the American system of checks and balances where the legislature writes the law, the executive approves the law and the courts interpret the law.
There shouldn’t be any need for interpretation on this one as HB 1203 states:
An association and its officers, directors, employees, and agents may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expenses.
The new law also says that if a debit card is used for any expense that is not approved by the board, in the minutes of the board meeting, or in the budget, the person who uses the debit card could be convicted of a felony!
Frankly, it’s surprising it has taken this long to pass legislation like this.
After a rash of debit card fraud in condominium associations, the state outlawed the use of debit cards by those associations. This legislation makes it illegal for all associations to use debit cards.
What Do We Do Now?
In a nutshell, stop using debit cards by July 1, 2024.
Many associations have moved to one of the many online programs that help you pay bills, such as Gusto, Bill.com or Melio. Each of those programs provides a safe and simple way to pay the association’s bills.
Of course, you can still do things the traditional way – write a check. And, if you would like to charge expenses, you can still do that through a traditional credit card, although that method can still expose the association for losses.
The important thing to do is have our firm review all financial safeguards that can be legally used to prevent fraud and theft. One thing is assured, a person intent on stealing from your association will find a loophole.
It’s our job to help make that tougher.
The attorneys at The Orlando Law Group can help association board members and managers in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on June 12, 2024 by The Orlando Law Group
